What's Goldman After With Its Big Green Energy Plan? More Green

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Wind TurbinesJust how much do people hate Goldman Sachs (GS)? Here's a hint: The investment banker announced this morning that over the next decade, it intends to invest $40 billion in developing clean, renewable energy projects.

Critics immediately rounded on Goldman and accused it of cynical media manipulation.

Goldman's been talking renewable energy since 2005, they argue. It invested $4.8 billion last year, and "co-invested" in another $500 million worth of clean energy projects.

All Goldman's really doing, therefore, is tooting its own horn about something it's already doing, and attempting a "charm offensive" to distract people from its misdeeds.

But this makes sense ... how, exactly?

Goldman spent more than $5 billion last year on renewable energy projects, and it says it will invest tens of billions more in years to come. It has demonstrated a commitment to the idea, taken steps to implement the investments, and proven that it means what it says.

And how exactly is this wrong?


Making Money Makes Sense

Hate Goldman Sachs all you want, but the idea that one of the smartest, and richest investment bankers in the world would spend $40 billion on a PR campaign trying to make itself look good is, on its face, nonsensical. There's no return on investment in something like that.

On the other hand, if you take Goldman at its word, the idea of investing in renewable energy -- for real -- makes a lot of sense. As Goldman explains, the "emerging opportunity" in green energy "will be quite large." The more global energy demand grows, the greater the investment thesis for finding new ways to produce energy (hydrocarbon-based dinosaur juice being, by definition, a diminishing resource).

We're going to need a lot of extra energy in years to come, and Goldman's broad-based bet that it can make money from funding efforts to develop "solar, wind, hydro, biofuels, biomass conversion, energy efficiency, energy storage, green transportation, efficient materials, LED lighting and transmission" technologies just plain makes good business sense.

Sure, not all these technologies will prove commercially viable. Yes, there have been some notable – headline-grabbing, even -- failures in solar power and electric cars lately. But maybe a major move into the industry by a smart capital allocator like Goldman is just what the Green Energy movement needs if it's to one day produce more than just PR ... and actually produce some profits.

Motley Fool contributor Rich Smith holds no position in any company mentioned. Motley Fool newsletter services have recommended buying shares of The Goldman Sachs Group.

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Gumby

Aluminium is green and lightweight!

May 25 2012 at 12:19 PM Report abuse rate up rate down Reply
k4jlp

American trust in all of Wall Street is ZERO, it can't get any lower. Why do you think crude/gas prices are SLOWLY drifting down? It's because of all those futures contracts being sold by crooks like GS. The spotlight is now on how hedgers/speculators have driven up crude/gas since 1999 with the repeal of Glass-Steagle....we are not stupid.

May 25 2012 at 6:29 AM Report abuse -2 rate up rate down Reply
capenv

I don't trust Goldman Sachs. They wouldn't do anything unless there's a huge porfit in it for them. Most likely screwing alot of people in the process. They'll sell Green Energy to their clients while hedging against it
at the same time. Then make a huge windfall profits when Green Energy fails. They'll manipulate the market, clients lose but they'll reap $billions. Fool me once shame on you, fool me twice shame on me.

May 24 2012 at 11:26 PM Report abuse +1 rate up rate down Reply